Does Reg CC Apply to Business Accounts and What It Means

Reg CC applies to business accounts, but there are some exceptions and nuances to consider. For example, business accounts that meet the definition of an "integral account" are exempt from Reg CC's requirements.

Businesses with multiple accounts may be subject to Reg CC, but the rule only applies to accounts that have a direct deposit or withdrawal of funds. This means that accounts used solely for bookkeeping or record-keeping purposes may be exempt.

Reg CC's requirements for business accounts are similar to those for personal accounts, with some key differences. For instance, businesses must provide consumers with notice of their right to receive next business day availability of deposited funds.

Businesses that are subject to Reg CC must also provide consumers with accurate and timely information about their deposits and withdrawals.

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Reg CC is a federal requirement for banks and credit unions to make funds deposited to a transaction account available for withdrawal within specific timeframes. It's rooted in the 1987 Expedited Funds Availability Act.

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The regulation has been revised several times over the years to address concerns about lengthy holds on checks deposited by customers. This change aims to provide consumers with more timely access to their funds.

Reg CC covers demand deposit accounts or similar transaction accounts at a depository institution that can make third-party payments. These accounts allow customers to make transfers or withdrawals by various means, including checks, electronic payments, and debit cards.

Account types that are not covered by Reg CC include savings accounts or time deposit accounts, like money market deposit accounts. Even though these accounts may have limited third-party payment powers, they don't fall under the regulation.

Here's a breakdown of the types of accounts covered by Reg CC:

The regulation excludes certain types of accounts, including those held by banks, offices of institutions, and the Treasury of the United States.

Reg CC for Business Accounts is a regulation that applies to accounts held by legal entities, such as businesses. The regulation sets limits on how many days a bank can hold funds from a check deposit and requires disclosure of funds availability to the account holder.

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Reg CC applies to business accounts because they are considered transaction accounts that permit third-party payments. Business accounts are defined as accounts at a bank from which the account holder can make transfers or withdrawals by negotiable or transferable instrument, payment order of withdrawal, telephone transfer, electronic payment, or other similar means for the purpose of making payments or transfers to third persons or others.

Reg CC excludes accounts where the account holder is a bank, an office of a financial institution located outside the U.S., or the Treasury of the United States. Business accounts do not fall into these exclusions, so they are subject to Reg CC.

The American Bankers Association and the National Association of Federal Credit Unions have interpreted Reg CC to include business accounts. This means that businesses must comply with the regulation's requirements, including making funds deposited to a transaction account available for withdrawal within specific timeframes.

Reg CC requires banks to make funds available for withdrawal within a specified time period, which varies depending on the type of deposit. For example, if a business deposits a check, the bank must make the funds available for withdrawal on the next business day if the check is deposited before the bank's cut-off time.

Here is a summary of the types of accounts covered by Reg CC:

The regulation does not apply to savings accounts, time deposit accounts, or other types of accounts that do not permit third-party payments.

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Reg CC applies to both consumer and business accounts. This means that financial institutions need to make sure their disclosure updates are comprehensive and accurate for all types of accounts.

Don't forget to update account-level disclosures that may have availability terms built into them, such as online banking, mobile banking, mobile deposit, and cash management agreements.

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To comply with fraud requirements, your financial institution must suspect fraud when deposit amounts are suspicious. This could be due to inconsistencies in deposit information or unusual transactions.

The CFPB has made changes to the minimum amounts financial institutions must make available from deposits, which will take effect on July 1, 2025. This means you'll need to adjust your procedures accordingly.

If your institution suspects fraud, you'll need to take action to prevent further unauthorized transactions. This may involve freezing the account or contacting the account holder to verify the transactions.

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The CFPB's changes to the minimum amounts will impact the funds availability schedule for certain deposits. You'll need to review your current schedule and make the necessary adjustments to comply with the new requirements.

In some cases, financial institutions may be allowed to make exceptions to the fraud requirements. However, these exceptions should be clearly documented and justified.

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Reg CC applies to both consumer and business accounts, so make sure to update your disclosures accordingly.

You'll need to update funds availability disclosures, including notices, stickers, agreements, webpages, lobby notices, advertisements, and quick reference guides as needed.

Don't forget account-level disclosures that may have availability terms built into them, such as online banking, mobile banking, mobile deposit, and cash management agreements.

Update your ATMs, including any stickers and screen displays, to reflect the changes.

If you include a funds availability statement on the back of checks, be sure to update that statement as well.

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Reg CC governs the availability of funds and the collection and return of checks, implementing the Expedited Funds Availability Act.

The regulation requires banks to make funds deposited in transaction accounts available to their customers within specified time frames, which are outlined in the availability schedule.

Cash deposits, wire transfers, and certain check deposits, such as Treasury checks and cashiers checks, are generally made available for withdrawal by the business day after the banking day of deposit.

Proceeds of local and nonlocal checks must generally be made available for withdrawal by the second and fifth business day following deposit, respectively. However, there are no longer any nonlocal checks.

Certain safeguard exceptions to the availability schedule are provided for new accounts, large deposits, repeatedly overdrawn accounts, emergency conditions, and other circumstances.

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Regulation CC applies to accounts generally, which means it applies to business accounts, according to the American Bankers Association and the National Association of Federal Credit Unions.

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The regulation defines an account as one from which the account holder can make transfers or withdrawals by various means, including negotiable instruments, payment orders, and electronic payments. Business accounts fit this definition.

However, Regulation CC excludes certain types of accounts, including those held by banks, foreign banks, and the Treasury of the United States.

Business accounts are required to have the business name attached as the main account owner or as "Doing Business As" on the official account documents.

Regulation CC sets limits on how many days a bank can hold funds from a check deposit and requires disclosure of funds availability to the customer.

Here are some key points about business accounts and Regulation CC:

Regulation CC has a reasonable cause to doubt collectibility exception, which allows banks to hold funds for longer than usual if they have a valid reason to believe the check won't be paid. This exception is especially relevant for business accounts.

The exception is defined in Regulation CC, but the regulation itself doesn't specifically mention business or non-consumer accounts. However, the American Bankers Association and the National Association of Federal Credit Unions have interpreted the regulation to include business accounts.

To qualify for the exception, a bank must have a reasonable cause to doubt collectibility, which means they need to have evidence that the check will likely be returned unpaid. This could be due to a variety of factors, such as the check being drawn on an account with insufficient funds or the check being counterfeit.

Here are some possible reasons a bank might have a reasonable cause to doubt collectibility:

Note that this is not an exhaustive list, and a bank's specific circumstances may warrant a hold on funds even if they're not listed here.

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